High-cost keywords. Conversion rates.

[omegapandor]

Conversion Rates​

So, one of the first things any affiliate marketer using adwords notices is. . .
damn, all the keywords I can use cost $5.00 / Click. Gosh, that's expensive, one says.

However: Companies and Han Solos are willing to spend hundreds, thousands, even over a hundred thousand dollars EVERY WEEK on PPC marketing. Obviously, if this wasn't profitable, they wouldn't do it.

In addition to pending a huge amount of money, many marketers claim to make insane amounts of money in return. But if you spend $10,000 to make $10,100,
how much money are you really making? Well, $100, to be exact.

And so, my question is this:​

What exactly is a GOOD converstion rate? So far to me it seems like most people consider %1-2% to be very good. Unfortunately, for a person starting out, that's EXPENSIVE.
Scenario:

Revenue per conversion: $60
CPC: $2.00
Conversion Rate: 2%

After 100 clicks, you've spent $200. The conversion rate is 2%, so 2 of your clicks produce conversions - that makes $120 in sales. You've lost $80, which most certainly was not the starting objective.

How the heck are people spending $8 per click and making good profits? Are they making a profit of around $1 per conversion and it simply adds up? Even then, the conversion rates certainly have to be higher than 2%.

ARGHBLARGH!

:?

 

[shaper]

I think having high landing page relevance helps with your costs. A lot.

If google thinks your ad and landing page aren't a good fit its going to slam you. Actual click through rates that are demonstrated should lower your costs. From googles perspective its partially about relevance and partially about total revenue generated per page impression. If your ad is converting well they don't have to show as many pages to get revenue for themselves. (If your ad converts at 2x a competing ad, they only need to charge you half as much, and you probably get bonus points for providing a "quality search experience").

Pretty new at this, and haven't achieved results that I am satisfied with yet, but that seems to be a major factor. . Of course when you are competing with a lot of other ads, some with long established campaigns it might be extremely difficult. In many cases the competitors have an advantage in that they are direct sellers, so they have the advantage of wider profit margins because they aren't splitting with an affiliate.

Just the same, there are obviously people succeeding at this, so it clearly can be done.

Conversion rates on well done sites appear to vary from 1-8% typically, depending on the exact nature of the site. So its probably a combination of getting an effective click thru rate/relavency score to keep your costs down and maximizing sales. If you are direct search marketing then you are very dependent on the target site for making conversions without pre-sale.

Like I said, still learning and it seems very challenging. Undoubtedly the model is working for someone, hopefully see some more knowledgeable advice surface in this thread.

 

[bosmolskate]

If you can lower your profit margins or increase your price without significantly affecting your bottom linke then do so and take advatage of the PPC campaigns

 

[enlytend]

I think having high landing page relevance helps with your costs. A lot.

It does. You need to closely match your Adgroup keywords, ad text and landing page copy, AND for Google you need more on your landing page than just a "bridge" page to the merchant.

In many cases, if you're getting hit with $5 or $10 keyword bids you've probably been "google slapped".

Many campaigns lose money initially. You need to monitor your stats closely, try different things and fine-tune your campaign.